Small Business Optimism Up, Hiring Not

Michael Alter is president of SurePayroll, America?s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University.

As we make our way, in stops and starts, along the road to economic recovery, small businesses are starting to see some demand rebounding in their businesses. According to our SurePayroll Small Business Scorecard optimism survey, 70% of small business owners are feeling optimistic about the economy. It's the first time we've seen that number in the 70%-range since May last year.

Still, hiring and wages have remained essentially flat. The SurePayroll Scorecard for March showed hiring down slightly (-0.2%), while average wages remained the same.

I believe it's not surprising we have this dichotomy in our data. Small business owners have adjusted their expectations based on the economic situation: a slowly-recovering economy that's less than thriving. They're optimistic while still being cautious when it comes to taking action.

But there are good signs for the future. Our survey found that nearly 80% of small businesses met or exceeded financial expectations in the first quarter of 2012. Furthermore, 67% said they plan to maintain their current employment level, and more than 30% plan to increase hiring by as much as 10%. Hardly any are looking to pull back on hiring.

I just hope that forces outside the control of small business owners could get in the way of this promising future.

Of those owners that met or exceeded financial expectations, almost 60% said a reduction in the costs of doing business (taxes, insurance costs, and gas prices) was the most important factor to continue their momentum into the second quarter.

But at the same time, we have prices at the pump rising out of control, the burdens of insurance costs (which also keep going up), as well as complicated taxes, and you can see why small business owners continue to proceed with caution on hiring.

We can drive out of neutral and align our rising optimism with action by cutting out government regulations, and giving owners more simplicity and certainty. If we reduce, we can grow. Let's give small businesses the freedom to focus on seeking new business, not managing regulations and compliance, and paying unnecessary costs.

Maybe then we will see the results that match our resilient attitudes.